Negotiating Effective Contracts & Dealing with Disputes Advice from Outside CounselIR Global members collaborate with the Association of Corporate Counsel (ACC) to offer jurisdiction-specific perspectives on contract negotiation and dispute resolution.

IR Global - The Future of Professional ServicesIR Global was founded in 2010 and has grown to become the largest practice area exclusive network of advisors in the world, in just a few years. This incredible success story has seen the network awarded Band 1 status by Chamber & Partners, recommended by Legal 500 and featured in publications such as The Financial Times, Lawyer 360 and Practical Law amongst many others.

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Businesses today require more than just a traditional law-yer or accountant. IR Global is at the forefront of this transi-tion with members providing strategic support and working closely alongside management teams to help realise their vision. We believe the archaic ‘professional service firm’ model is dying due to it being insular, expensive and slow. In IR Global, forward-thinking clients now have a credible alternative, which is open, cost-effective and flexible.

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STRATEGIC PARTNERS Strength comes via our extended network, if we feel a cli-ent’s need is better handled by someone else, we are able to call on the assistance of our partners. First priority is to always ensure the client has the right representation whether that be with a member of IR or someone else.

Rachel FinchIR Global - Channel Sales Manager

rachel@irglobal.com

Association of Corporate Counsel | Negotiating Effective Contracts and Dealing with Disputes

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ContributorsMark Benton (South Korea) ...............................................8

Urs Breitsprecher (Germany) ...........................................10

Tommaso Mancini (Italy) ...................................................12

Colin Smith (England) ........................................................14

Robert Cain (England) ......................................................14

Martim Machado (Brazil)...................................................16

Clinton Morrow (Hong Kong) ...........................................18

Maurice Choquard (Switzerland) ....................................20

Gary Davidson (Florida) ....................................................22

John F. Friedemann (California).......................................24

Tony S. Gruchot (Turks & Caicos Islands) .....................26

Stephen Wilson, QC (Turks & Caicos Islands) .............26

Şafak Herdem (Turkey) ......................................................28

Anna Martine Stubben Skovsgaard (Denmark) ............30

Anders Hedetoft (Denmark)..............................................30

Ruggero Rubino-Sammartano (Italy) ..............................32

Oscar Conde (Mexico) ......................................................34

José María Dutilh (Spain) .................................................36

Dimpy Mohanty (India) ......................................................38

Seema Jhingan (India).......................................................38

Graham Brown (China) ......................................................40

Wei Xin (China) ...................................................................40

Florian Wettner (Germany) ...............................................42

Cristina Bergner (Sweden) ...............................................44

Norman Bernstein (New York) .........................................46

Klaus Oblin (Austria) ..........................................................48

Dominic Wai (Hong Kong) ................................................50

Jian Zhang (China) .............................................................52

Thomas Paoletti (UAE) .......................................................54

Mark Regan (Ireland) .........................................................56

Peter Ruggle (Switzerland) ...............................................58

Aleš Eppinger (Czech Republic) .....................................60

Daniel Jimenez (Spain) ......................................................62

Leonard Rodes (New York) ..............................................64

John Wolfs (Netherlands) .................................................66

FOREWORD BY EDITOR, NICK YATES

Negotiating Effective Contracts and Dealing with DisputesMulti-national corporations will always have a wide range of different con-tracts in place at any one time, be they with contractors, suppliers, vendors, clients or intellectual property licen-sors, among other parties.

Drawing up and negotiating those con-tracts effectively will, inevitably involve in-house counsel, particularly the more complex contracts requiring bespoke wording and specific clauses.

Many experts within commercial contract law recommend the five Ws approach (what, where, when, who and why), as a method to help clar-ify and crystallise aims and objectives before a contract negotiation begins.

This makes sense, however, the sheer variety of agreements in play will often make this approach difficult to imple-ment, even before adding in cultural and regulatory differences. Most multi-national operations will be dealing with entities in a number of different coun-tries and negotiating around a range of different legislative frameworks.

Sometimes the way forward will be clear, while at other times specialist skills will be required. This could be due to the uniqueness of the contract, or perhaps some peculiarity of culture or law that might affect negotiations.

This brochure is aimed specifically at helping in-house counsel to address these issues, by providing jurisdic-tion-specific insight and guidance from commercial and dispute lawyers in locations across the world.

Highlighting negotiation as an exam-ple, it is clear that culture plays an important role in the methods that prove most effective. In Anglo Saxon countries, showing an emotion, such as anger, can be a useful strategy to force a counterparty to concede ground, while in Latin countries it is likely to be less effective.

In negotiation with Chinese counter-parties, it is useful to know that delay is a standard negotiating tactic. The thinking being, that the closer the other party gets to deadline, the more likely they will be to compromise.

With regard to legislation, it is impos-sible for in-house counsel to remain abreast of revised contract law in all the jurisdictions in which their corpo-ration has a presence. This is particu-larly true if the contract in question involves a highly specialised area, such as environmental law.

Taking California for example, a recent ruling changed the circumstances under which legal fees may be recov-ered in a contract dispute. The lan-guage used in an agreement must now be drafted carefully if the parties intend that the successful party is to recover the money spent in litigation, even where the successful party is defending itself in a lawsuit.

Regardless of the apparent success of contract negotiations, there is a reasonable chance that some form of dispute might occur between the par-ties involved. It is the responsibility of in-house lawyers to ensure that their company is adequately protected in the event of a dispute.

This involves ensuring the presence of an effective dispute resolution clause within the contract, that stipulates cru-cial things like location of enforcement proceedings and the use of arbitration and mediation.

A clear recommendation is to iden-tify a recognised arbitral institution with transparent and internationally understood rules. One such body, The International Chamber of Commerce (ICC), set new records for arbitration in 2017, with 512 awards approved, 1,488 arbitrators appointed and par-ties from 142 countries registering dispute cases.

Consulting outside disputes counsel early in the course of the negotia-tions in important, particularly when undertaking international transactions. If in-house counsel is contemplating using another country’s laws to inter-pret the deal terms, or considering the pros and cons of arbitration or litigation in one or more countries, it is important to engage local counsel in those countries to determine the legal and strategic risks to be borne by agreeing to particular terms.

As an example, counterparties will often seek to gain an advantage dur-ing a dispute through pre-emptive fil-ing in a jurisdiction with unfavourable laws, that they know will burden their opposition. If there is no enforceable forum selection or mandatory dispute resolution clause in the contract, then all bets are off with respect to who gets to file first and where.

Nick YatesIR Global - Editor & Copywriter

nick@irglobal.com

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TURKS & CAICOS ISLANDS (DISPUTES)

Tony S. GruchotSnr. Associate, Graham Thompson +1 649 339 4130

asg@gtclaw.com

grahamthompson.com

irglobal.com/advisor/tony-s-gruchot

Tony Gruchot is a Senior Associate in the law firm of Graham Thompson, and a member of the firm’s Litigation and Dispute Resolu-tion Practice Group. His practice comprises complex corporate and commercial disputes; most notably in the construction, banking and insurance sectors.

Tony has worked on multi-party actions, con-tract breaches, insolvencies, and liquidations, involving multinational and domestic compa-nies. His practice extends to admiralty litigation and maritime law, which has included environ-mental claims; family law, including matrimo-nial disputes, child access and custody mat-ters and divorce; and litigious matters related to employment and labour. He regularly repre-sents clients in court at all levels.

Stephen Wilson, QCPartner, Graham Thompson + 1 649 339 4130

sw@gtclaw.com

grahamthompson.com

irglobal.com/advisor/stephen-wilson-qc

Stephen Wilson, QC, is a partner in the law firm of Graham Thompson and head of the firm’s Litigation and Dispute Resolution prac-tice in Graham Thompson’s Turks and Caicos Island’s office in Providenciales. He has head-lined cases involving multinational entities, across a range of sectors. Notably tourism and hospitality, banking, real estate, insur-ance and construction sectors.

His work has included multi-jurisdictional claims and multi-party actions, and he is especially noted for his expertise in complex corporate and commercial disputes. He is highly regarded for his knowledge of constitu-tional and administrative law and is a leading attorney in the field of asset recovery.

TOP TIPS FOR

Successful negotiations Do your homework and be prepared: Research the topic and gather as much pertinent information prior to the negotiation as possible. What are the counterparty’s needs? Where are their pressure points? What are their options? Doing your home-work is vital to successful negotiation.

Clearly define your goals: Prior to the negotiation, make sure you are clear on what you want as well as your ‘walk-away’ point.

Aim high: A proven strategy for achieving higher results is opening with an extreme position. Those looking for payment should ask for more than they expect to receive; those having to pay should offer less than they are prepared to pay.

Don’t dangle a carrot you cannot give up; and don’t wield a stick you are not prepared to use: No matter how much you want to reach a deal or a particular outcome, don’t promise something you are unable to deliver. The use of ultimatums and threats (best made without getting emotional) are part of a negotiation but never make a threat you are not prepared to follow through.

Listen, listen, and … listen: Spend more time listening than talking during the dis-cussion. The other negotiator will tell you everything you need to know – all you have to do is listen.

Established in Nassau, The Bahamas, in 1950, the top-ranked Graham Thompson Attorneys is a highly regarded law firm with expertise in admiralty & maritime law; banking and financial; cor-porate & commercial; employment & labour; immigration & naturalisation; insurance; litigation & dispute resolution; private clients, trusts and estates; and real estate & development. The Gra-ham Thompson family includes former attorneys general, cabinet ministers, justices and other leading roles including chairmanships of public boards, councils and special commissions. Graham Thompson operates four offices: Nassau and Lyford Cay in New Providence; Freeport, Grand Bahama; and Providenciales, the Turks and Caicos Islands.

QUESTION ONE

What is your best practice approach when advising General Counsel to ensure dispute resolution clauses are to their real advantage and do not obstruct enforcement proceedings?Because of the antiquated state of the arbitration law in the Turks and Cai-cos Islands (‘TCI’) - the Arbitration Ordinance (Cap. 4.08) came into force 10 years before the UNCITRAL Model Law was adopted by the United Nations Commission on International Trade Law and is as sparse in its provisions as the Arbitration Act 1889 of England and Wales. The result is that the law in TCI remains much the same as it was in England and Wales before the Arbitration Act 1934 – we always advise that arbitration clauses are drafted in as much detail as possible and incorporate by reference institutional rules (such as the AAA), as well as providing for the selection of arbitrators through a recognised international arbitration organisation. Qualified, impartial arbitrators are not easy to find in TCI.

In addition, the TCI is not a contracting party to and has not ratified the New York Convention, meaning that any arbitration award made in a TCI arbitration is not automatically recognised and enforceable elsewhere. As such, we would generally recommend that any arbitration clause selects a jurisdiction other than the TCI and one which is a party to the New York Convention as the seat of the arbitration.

As for other forms of alternative dispute resolution, there is a genuine absence of qualified, impartial mediators in TCI. We would again suggest that any dispute resolution clause providing for mediation as a form of dis-pute resolution is drafted to select mediation in a jurisdiction that benefits our client and with which he/she is comfortable and familiar.

The TCI is not a party to any treaty dealing with the mutual recognition and enforcement of judgments, meaning that judgments and orders of the TCI courts are not automatically enforceable in other countries. An exclusive jurisdiction clause selecting the courts of the TCI can be advantageous to a client if it has assets elsewhere in the world and not in the TCI.

QUESTION TWO

Are there any particular rules around funding litigation in your jurisdiction that General Counsel should be aware of?Contingency fee arrangements, that is to say, an agreement whereby the amount of the legal fees is contingent on the success of the claim, and is dependent on the value of the damages recovered, are unlawful at com-mon law. A contract which breaches the rule against champerty and main-tenance is against public policy and is therefore unenforceable.

Conditional fee agreements have been common place in England and Wales since their statutory introduction in 1995. A conditional fee differs from a contingency fee in that the fee, whilst still only payable in the event of success, is calculated as a percentage uplift on the normal hourly charging rate i.e. it is independent of the amount of damages recovered. There is no equivalent legislation in the Turks and Caicos Islands (‘TCI’) and conditional fee agreements are not present in the jurisdiction.

Damage-based agreements (‘DBAs’), a form of contingency fee arrange-ment, are now available in England and Wales for most contentious work (other than criminal or most family matters) under relevant legislation. Again there is no equivalent legislation in the TCI and DBAs are not pres-ent in the jurisdiction. In the absence of any specific legislation in the TCI to allow for any form of contingency fee, any arrangement which amounts to be a contingency fee would offend the rule against champerty and maintenance and would be unenforceable.

There is also an absence of legal protection insurance and ‘after the event’ insurance and as a result all litigation is funded on a private client basis.

QUESTION THREE

What techniques are typically used by international counterparties in your experience when attempting to gain the initiative during a dispute? How important are civil procedural rules?Depending on the nature of the claim, an international counterparty may seek to either establish a jurisdictional basis for a claim in the TCI, or seek to avoid the jurisdiction of the TCI courts at all costs. Finding or avoiding a jurisdictional hook is a technique that must be deployed early in the proceedings to be effective. The civil procedural rules play an important part.

As to establishing a jurisdiction in the TCI, the TCI courts will follow the prin-ciples established at private international law. The Rules of the Supreme Court 2000 (which are based upon the Rules of the Supreme Court of England and Wales as they stood at 1 January 1999), provide that a defendant who wishes to dispute the jurisdiction of the court, must do so within the time limited for the service of a defence in those proceedings. A defendant must therefore act quickly and must not be seen to “take a step in the proceedings” to avoid coming within the court’s jurisdiction.

Jurisdictional challenges are often deployed by international counterpar-ties as a means to delay or stymie unwanted litigation.

Advising an international client on whether to submit to the TCI jurisdiction or not, will very much depend on the nature of the claim. For large com-mercial matters, the TCI has a highly competent and independent judiciary with very limited backlog, so matters can be determined quickly. For other matters, such as personal injury claims, we may well advise a plaintiff cli-ent that awards outside the TCI are likely to be more favourable.

An international counterparty with resources and a lot at stake, may seek to have the litigation (although based in TCI) driven primarily by a large international firm. While this will no doubt afford the client (and the TCI attorneys) with extended resources in terms of manpower, it may have sig-nificant costs consequences for the client. Although the TCI courts follow the general principle that costs will follow the event, the Legal Profession Ordinance provides that costs are only recoverable in respect of work done by attorneys admitted to the roll of attorneys in TCI.

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